Thoughts on Dow-DuPont merger?

[gil.gullickson]

All,

I just posted this about the Dow-DuPont merger. Any thoughts on how this might affect seed/chemical purchases in future? I'm guessing there might be some disagrement with the analyst's thought toward the bottom of this story?:-)

Gil

http://www.agriculture.com/news/business/its-official-meet-dowdupont_5-ar51578

[Blacksandfarmer]

Gil, I'm a farmer/seed dealer for one of these companies. I'm not impressed, and I'm disappointed in both Dow and DuPont. I feel that instead of doing their jobs and working to make better products, they are more focused on keeping shareholders happy. More than likely at the end of the day the only loser will be the farmer with less companies and products to choose from. The positive side may be more money for research. 

[gil.gullickson]

Thx, Blacksandfarmer. I suspect it will take a couple of years--maybe more--to figure out what they have.

The folks who cover this regularly seem to be skeptical of it, as the Forbes link below points out. One interesting thing to come out of this and other mergers underway are these activist sharehoders. It seems in this case that one of these entitites that owned just under 3% of DuPont helped drive this merger/buyout. 

http://www.forbes.com/sites/adamhartung/2015/12/13/dupont-dow-merger-nobody-wins-when-transactions-r...

Gil 

[sw363535]

Gil, 

i think he is repeating what he is told by the seed companies.   How can he ignore the way competition was bought up in order to control distribution.  There has not been open competition for quite some time...

That doesn't address what the actual cost / return of technology or the profit margins.  The attitude at the seed meetings this winter says there is no competition.

Unfortunately we face the same monopolized market in fertilizer.  Another input that shows no sign of price reduction even though the input costs of natural gas and petroleum are diving to extreme.  

These monopolies need broken up, not strengthened.

[gil.gullickson]

Thx, good to know. We are going to meet with some seed companies in the next few weeks, so I will ask them about this. Something's got to give. Make that about everything has to give. Things sure have fallen apart in the last three years pricewise, but it doesn't seem the case in the input category. 

Gil

[Blacksandfarmer]

Gil, In my opinion, I think the two big drivers in this merger when it comes to the ag side of these two businesses is this:  

1) Dow needs a larger platform in which to launch Enlist. Adding Pioneer to the roster of seed companies that would have the Enlist trait in its seed lineup would do that. 

2) Most large scale farming operations are looking for the latest and greatest seed technology. DuPont is falling behind when it comes to herbicide and insect traits.  

In the end the farmer may lose when it comes to the amount of variety in seed companies to choose from but may benefit from the availability of new technology.

[sw363535]

Leave it to blacksand to make us think a little deeper.

Gil,  This technology and the development in seed traits is special and the cost can be justified somewhat in greater yield.

It is just tough to keep digging up the price in a high risk market, while at the same time I would hate to see the gains we have made go to waste...

[ECIN]

Great points Sandy !  Will add a maybe here - The enlist has cost what to bring to market ??? Just a few billion ? AND it's still not on the market  - yet - as Monsanto's is - How many billion did that cost them ? My question - will enlist ever make it to market - How much more money do they throw at it - This may be as you said - to help both companies = Cash for Dow and New produces for big P .

I will say by what I said a year or so ago - This was a waste to develop as it will not last as long as roundup did = resistance  

[gil.gullickson]

All,

When I wrote the January story on 10 things about herbicide-tolerant technologies, I wondered if the info about the EPA revocation of Enlist Duo would be out-of-date by the time the story appeared. So far, no word from EPA or Dow on it.

My gut feeling is Enlist Duo (the herbicide portion of the Enlist Weed Control System) will be be again approved by EPA, but probably with some more restrictions on its use, such as wider border areas. Then again, the feds work on their own timetable. 

 I can remember when 2014 and 2015 were batted around as estimated commercialization dates for the whole system to be approved. I imagine these delays are causing some consternation @ Dow these days. 

Gil